BOSTON - House leaders on Wednesday unveiled a harsh state budget that closes a $3.6 billion shortfall with federal stimulus money and deep cuts in programs including $424 million reduction in aid to cities and towns.

The House Ways and Means budget for the fiscal year that starts July 1 is $27.44 billion, down $532 million from the fiscal 2010 budget proposed by Gov. Deval L. Patrick.

Rep. Charles A. Murphy, D-Burlington, said the budget is balanced with no new taxes. Murphy said the budget uses none of the remaining $1.3 billion in the state's rainy day reserves.

The budget contains a lot of financial pain but it reflects the poor economy and falling state tax collections, according to Murphy.

"People will be hurt," said Murphy, chairman of the House Ways and Means Committee, at a Statehouse press conference. "That's the reality."

The budget closes a $3.6 billion projected deficit with $1.8 billion in across-the-board cuts to state programs, $1.4 billion in federal stimulus dollars applied mostly to Medicaid and $400 million in miscellaneous actions such as fee increases and cutting $100 million from planned payments for unfunded pension liabilities.

The budget abolishes several key programs including $13 million in anti-gang grants for Holyoke, Springfield and other communities, $21.3 million in community police grants and $50 million in reimbursements for communities that adopted the so-called Quinn law, which gives police officers salary increases for obtaining college degrees.

Rep. Stephen Kulik, D-Worthington, the No. 3 power on House Ways and Means, said House members will likely consider possible tax increases on April 27, the first day of a full House debate on the budget. Kulik said he would consider supporting certain tax hikes.

While the budget is grim, it does provide $3.95 billion in Chapter 70 general education aid and $30.3 million in reimbursements to communities with state-owned lands on which they collect no property taxes. Both items are financed at the same level as this year, Kulik said.

In addition, the budget also includes $169 million in federal stimulus aid that is being distributed to 166 school districts including about 30 in Western Massachusetts. Patrick announced that federal aid last month.

Leslie A. Kirwan, state secretary of administration and finance, said the House budget is an important step.

"We look forward to continuing to work with the House and the Senate through this tough budget process," Kirwan said.

The Senate will approve its own budget version next month. A compromise House-Senate budget will be sent to the governor's desk in late June or early July.

In the House plan, state aid in two categories - lottery and additional assistance - was slashed to $889 million, down 32 percent from $1.3 billion approved in the original budget for this year before emergency cuts by Patrick. While general education aid will stay the same, some communities use lottery aid or additional assistance for schools.

Leaders of cities and towns in Western Massachusetts said the proposed reduction in state aid would hurt local services.

Northampton Mayor Mary Clare Higgins said the cuts in the House budget would mean an additional loss of about $206,000 for Northampton.

The city is already struggling with a projected $6 million budget gap. Although Higgins is optimistic about saving some money through a new health insurance strategy, she said the new cuts would more than absorb those savings.

"Overall, we're looking at pretty drastic cuts in education and public safety," Higgins said, noting that the city was already considering the elimination of about 100 jobs before the latest cut in local aid.

In his proposed budget, Patrick had called for reducing lottery aid and additional assistance by $375 million, or 28 percent. In January, Patrick also imposed a mid-year cut of $128 million in state aid.

Agawam Mayor Susan R. Dawson said she will discuss the House cuts with her budget team, which includes top Agawam officials.

"This is kind of a curve ball," Dawson said of the budget cuts.

She said could not rule out layoffs under a restructuring plan she is developing.

Chicopee Mayor Michael D. Bissonnette said the budget reduces the city's state aid by $6 million.

Bissonnette said that could translate into 120 layoffs, mostly police, firefighters and public works employees.

"That will mean a substantial cut in the city's budget and massive layoffs," he said.

The city has $10 million in reserves that could be used to prevent layoffs, the mayor said.

Bissonnette criticized House leaders for eliminating state aid for the Quinn law. He said the law is an incentive for police to obtain college degrees.

"Do we want to go back to the old days when police officers weren't sophisticated and educated and we're sued all the time?" the mayor asked.

Springfield Mayor Domenic J. Sarno said the city has been bracing for the additional cuts, but is awaiting confirmation of the numbers.

"While you never want to hear that you have to face more cutbacks in funds, as done before, we will be prepared to make the difficult decisions and strategic moves," Sarno said. "We will continue to meet the fiscal challenges we have."

Sarno announced 89 layoffs of employees in the wake of Patrick's mid-year cut in local aid including $4.6 million for Springfield.

West Springfield Mayor Edward J. Gibson said the House budget would provide about $168,000 less in state aid to West Springfield than the amount provided in the governor's budget.

"Overall, that could equate to about another $80,000 reduction on the school side and $88,000 on the municipal side, but it is too early to say for sure," he said.

The $168,000 reduction could reflect another five or six staff cuts across the board, Gibson said.

Because of an infusion of federal stimulus aid, public higher education was one of the few winners in the otherwise stark budget.

In the House plan, the budget for the five-campus University of Massachusetts is $493 million, basically the same as this year, including $81.6 million in federal stimulus money. The Amherst campus receives about half that money.

"This is a proposal that our students, their families and all citizens ... should welcome," said Jack M. Wilson, president of the University of Massachusetts.

Westfield State College and community colleges in Western Massachusetts and elsewhere are also benefiting from stimulus money, meaning their budgets would face only minor cuts.

Last month, Patrick announced the stimulus money for the University of Massachusetts. The 15 community colleges will receive $40.3 million in stimulus aid and the nine state colleges, $36.7 million.

Proposed cutsHere are some items and planned cuts in a $27.44 billion state budget released by the House Ways and Means Committee for the fiscal year that starts July 1. The full House will debate the budget starting April 27.
• $889 million in local aid from the lottery and additional assistance, down 32 percent from this year's original budget
• $13 million in Charles E. Shannon grants for Holyoke, Springfield and other communities for anti-gang programs
• $50 million to reimburse cities and towns for salary increases for police officers under the Quinn law, which increases the pay of police officers who obtain college degrees
• $21.3 million for grants for community policing
• $11.3 million for the Massachusetts Cultural Council, including grants, down 10 percent
• $63.5 million for prevention and treatment of substance abuse, down 21 percent
• $2.8 million for suicide prevention programs, down 40 percent
• $3.1 million for prevention of teenage pregnancy, down 22 percent
• $5.9 million for state aid to public libraries, down 40 percent
• $750,000 for grants to private, nonprofit groups for workforce development, down 931 percent
• $7.7 million for Hampden District Attorney, down 7 percent
• $4.8 million for Hampshire/Franklin District Attorney, down 7 percent
• $6.5 million for grants to Head Start programs, down 35 percent
• $5.8 million in grants to boys and girls clubs, YMCA and YWCA programs
• $16 million for community-based services for the elderly and disabled, down 20 percent
• $30 million for reimbursements for regional school districts for transportation of pupils, down 51 percent
• $1.5 million for Youth Build, a program that helps at-risk students with construction skills and education, down 44 percent
• $135 million in savings by forcing active state employees to pay 30 percent of costs of state health insurance, up from 15 percent for employees hired before June 30, 2003, and 20 percent for those hired after that date